Correlation Between Microsoft and PTT Exploration
Can any of the company-specific risk be diversified away by investing in both Microsoft and PTT Exploration at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and PTT Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PTT Exploration and, you can compare the effects of market volatilities on Microsoft and PTT Exploration and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of PTT Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PTT Exploration.
Diversification Opportunities for Microsoft and PTT Exploration
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and PTT is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PTT Exploration and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Exploration and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with PTT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Exploration has no effect on the direction of Microsoft i.e., Microsoft and PTT Exploration go up and down completely randomly.
Pair Corralation between Microsoft and PTT Exploration
Given the investment horizon of 90 days Microsoft is expected to generate 0.99 times more return on investment than PTT Exploration. However, Microsoft is 1.01 times less risky than PTT Exploration. It trades about 0.08 of its potential returns per unit of risk. PTT Exploration and is currently generating about -0.02 per unit of risk. If you would invest 24,616 in Microsoft on August 24, 2024 and sell it today you would earn a total of 17,084 from holding Microsoft or generate 69.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.98% |
| Values | Daily Returns |
Microsoft vs. PTT Exploration and
Performance |
| Timeline |
| Microsoft |
| PTT Exploration |
Microsoft and PTT Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PTT Exploration
The main advantage of trading using opposite Microsoft and PTT Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PTT Exploration can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PTT Exploration will offset losses from the drop in PTT Exploration's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| PTT Exploration vs. PTT Public | PTT Exploration vs. PTT Global Chemical | PTT Exploration vs. The Siam Cement | PTT Exploration vs. SCB X Public |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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